The shouts in favor of approving AT&T’s buyout of T-Mobile USA seemed to hit an all-time high this week, with tech heavyweights (Facebook, Microsoft, Qualcomm, others) throwing their support into the ring. Everyone from labor unions to teachers and the Gay and Lesbian Alliance Against Defamation (GLAAD) are supporting the merger. Makes you wonder why Justin Bieber hasn’t announced his endorsement, but maybe that’s because he’s Canadian or they’re holding out for someone else (like Luke Wilson?).
AT&T highlighted its Joint Opposition filing in a public policy blog yesterday, so I was eager to get a look at the finer points when it showed up in the FCC’s docket today. The preview alluded to the capacity crunch claims, so surely the filing would address those concerns in finer detail, right? Even with so much information redacted, you would expect more details on what AT&T is doing to alleviate the spectrum crunch using available technologies.
The section in the TOC titled: “Opponents Are Wrong That AT&T’s Spectrum and Capacity Constraints Are the Product of Poor Spectrum Management or Underinvestment” is especially intriguing.
Like prior filings by various competitors and the original application, you have to adjust your eyes to reading between redacted sections (giving your best guess as to what the missing figures/percentages/phrasing represent is always a fun game – for about 5 seconds.) I’m still reading through the pages and pages of documentation, but so far, here are a few quick take-aways.
For one, AT&T is not to blame for its spectrum and capacity constraints, as some merger opponents have asserted. AT&T says: “Even if that argument were factually plausible, which it is not, it misconceives the Commission’s task, which is not to assign blame for or second-guess past choices – with the benefit of 20-20 hindsight – but to act in the best interests of consumers going forward by enabling AT&T to address its spectrum and capacity constraints.”
At first, that sounds like a blanket “it’s not our fault, so back off” kind of response. But later, AT&T seems to say to opponents, paraphrased here, something like: Do you really think our network engineers haven’t looked at every conceivable technology out there to address our problems?
Well, actually, it reads: “Surely, opponents are not suggesting that AT&T’s network engineers are somehow unaware of developments in cellular technology that could be used to address this problem.” And it goes on to add that AT&T has been adding cell sites as quickly as it can find suitable locations and bring them online; it has deployed the nation’s largest Wi-Fi network; it has deployed public DAS systems and “hundreds of thousands” of femtocells. But even with all that, it’s not going to match what it can deliver by hooking up with T-Mobile.
As for those arguments about T-Mobile suggesting it had enough spectrum in the short to medium term? The document basically says the incredible growth in demand for data services on T-Mobile’s HSPA+ network has required a near constant adjustment to determine projected spectrum capacity constraints. So basically, I guess things constantly change so don’t blame T-Mobile if it thought it had it good with HSPA+ and therefore wouldn’t need LTE for a while. T-Mobile doesn’t have the spectrum needed to deploy LTE in “an economically and technically sustainable fashion,” and according to this, it isn’t going to get the bucks from anyone at parent Deutsche Telekom, so just forget about that.
Some merger opponents “attempt to minimize the significance of LTE to T-Mobile USA’s future, pointing to company statements that, they suggest, indicate that HSPA+ is equivalent in performance to LTE.” (Well, I do seem to remember statements to that effect.) But the filing says while HSPA+ competes today, LTE is the way of the future. HSPA+ is approaching the end of its deployment cycle, according to AT&T’s experts. (So would someone please tell that to the HSPA+ proponents who contend it’s got a long life cycle?)
It’s worth noting a footnote (of which there are many) that addresses the investment/underinvestment question. Calling Sprint’s criticism of AT&T’s purported underinvestment particularly ironic, AT&T’s filing says Sprint had the lowest capital expenditure, as a percentage of revenue, of any wireless provider from the second quarter of 2008 to the fourth quarter of 2009. And citing Sprint’s 2010 Annual Report, it says Sprint spent the same on advertising itself as it spent on investments in its wireless network. Snap that!
Based on what I’ve reviewed so far, the gist is: the merger’s opponents can try as they might, but they can’t deny that bringing these two together will benefit consumers with better service. To that, you can be sure the opponents are digging in their heels even further.
Filed Under: Industry regulations